Businesses show silent opposition to B and O tax

April 24, 2014

WEIRTON - Numerous members of the local business community and the Weirton Area Chamber of Commerce made their presence known at the city's fourth budget review committee meeting Wednesday, even though time had not been allotted for public comments.

They were there in silent opposition to the proposed business and occupation tax, one of several options being discussed by the committee, consisting of residents and City Council members, to help close the $1.8 million gap in the 2014-15 fiscal budget.

Some of the options on the table other than the B and O tax include a cable franchise fee through Comcast; increasing the police and fire services fee; increasing the municipal services fee; implementing a sales tax; reducing services; and putting levies on the ballot in the near future to fund things like recreation or the library.

Article Photos

PACKED?HOUSE — Business owners and members of the Weirton Area Chamber of Commerce packed the room at Wednesday’s meeting of the city’s budget review committee, which has been researching avenues to raise revenue and avoid a shortfall. The business community has expressed opposition to the proposed business and occupation tax. -- Shae Dalrymple

According to Ward 6 Councilman David Dalrymple, committee chair, council members are in agreement that the solution ultimately will involve some combination of those options, not just one.

Actions taken by council are subject to an advertising period and two separate readings at City Council meetings, and the budget takes effect July 1.

City Finance Director Tom Maher provided committee members with charts beforehand that painted four scenarios to estimate the amount of revenue that could be generated by the B and O tax.

An across-the-board 100 percent maximum allowed by law B and O tax would bring in about $8.4 million, while 75 percent of the maximum rate would generate about $6.3 million. Set at 50 percent of the maximum rate, the B and O tax would raise about $4,178,281, and set at 25 percent of the maximum it would bring in a total of approximately $2,089,140.

Maher clarified that many people are mislead when they see numbers like "100 and 75 percent." Set at 100 percent, the highest rate categories are 6 percent for natural gas production and 4 percent for domestic/commercial electric and non-municipal water. The lowest rates are 0.15 percent for wholesale, 0.3 percent for manufacturing, and 0.5 percent for retail and amusements.

Pat Ford, committee member and executive director of the Business Development Corp. of the Northern Panhandle, presented a recommendation that stretched into the 2015-16 fiscal year.

In the coming year under Ford's suggestion, the police and fire service fee would increase from $50 to $65 per household per year, generating $754,798 in revenue. The municipal service fee would remain the same as it is currently, $2 per week per employee. A 3 percent cable franchise fee would be enacted and bring in about $252,013 annually. These steps combined would add about $1,006,811 to the budget, which still falls short of the $1.8 million needed.

The second part of Ford's plan for the 2015-16 year would reverse the police and fire services fee back to its original $50 and maintain the cable franchise fee at 3 percent. An additional step would be to implement a 0.75 percent sales tax for accommodations and food services, which Ford estimated would generate up to $2 million using U.S. Census Bureau data. This plan would result in an estimated $2,252,013 additional revenue, meeting and exceeding the shortfall in the second year.

City Manager Valerie Means explained some of the details involved with implementing a sales tax.

"There is sales tax currently in the law, but it is very specific. It must go to underfunded pension funds, and also there's an option for complete reduction of B and O tax to be replaced by the sales tax," she said. "But again, then you're risking that situation not knowing what you're going to have come in from the sales tax. The current B and O structure would have to be completely eliminated. I would not recommend it at this time, because it's too risky."

Dalrymple noted Wheeling as an example, which implemented a sales tax in favor of a reduced B and O tax.

"They are getting far less than they projected they would from it, and now that their B and O tax is cut back they have a bit of a mess," he said.

Weirton's current B and O tax structure covers manufacturing, banks and utilities, but more categories could be "activated" if City Council decides to go that route.

The option of placing a "threshold" in the B and O tax guidelines could make the rates easier on new or small businesses by only charging the tax after a business meets a certain number of gross sales. According to Ford, a rule similar to that attracted Pietro Fiorentini, an Italian company that intends to invest $9 million in a manufacturing facility on Three Springs Drive.

"They liked that idea that they have time to get up on their feet and get business going rather than paying it up front," Ford said.

Committee members agreed at the end of the meeting that moves must be made cautiously, without "diving right into the deep end" regarding any of the proposed options. However, the clock is ticking.

The decision now rests in the hands of City Council, and another budget workshop, without the rest of the committee, is in the works.

"I'll admit I was skeptical at first," Ward 7 Councilman Terry Weigel commented. "But this has been a really good idea. I've enjoyed hearing everyone's comments. It's been an outstanding experience learning and getting input from everybody to see where we're at. The feeling I've gotten through these talks has been that we are all proud of our city. We all feel like we have a stake in it, and we want to see our city prosper. We like the services that we do have, and I think we do a good job with a lot of those things. Our problem is we're at a crossroads where in order to maintain those services and that quality of life, we must raise revenue. And we are limited as to what we can do."